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© 1997-2006
Gareth Knight
All Rights reserved

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Escom Logo
When Escom bought Commodore and the Amiga during 1995 it fell into the limelight of millions of curious users. A market it was ill prepared to support. Its purchase was unexpected for many but, in light of the high number of former Commodore staff that worked for the company is not unexpected. The Escom dynasty began during 1991 as the dream of one man, Manfred Schmitt. Since 1986 he had been impressed by the growing computer market and decided that it was the key to success. Just as Commodore had moved from office furniture to adding machines and calculators, Schmitt added computers to his organ and instrument shop. Escom quickly expanded their computer business until 1994, just three years later, they had a market share of 11.2% in Germany and second most successful PC provider in The Netherlands.
 
Year Turnover
1992 1.222 Mio. DM
1993 1.549 Mio. DM
1994 2.151 Mio. DM

Escom distinguished itself from other PC manufacturers through owning a PC retail chain and production facilities, where their own brand of computer and peripherals were sold. Its empire spread over 1500 shops in 10 European countries. Besides the 34 Escom stores in Germany, they built strategic alliances with Skala (24 stores in The Netherlands), consumer electronic chain Mikro-Electro (14 shops in Zeeland and West-Brabant), De Block (22 shops in Holland and Utrecht), Scheer & Foppen (44 shops in the north and east part of the Netherlands), and Horn (51 shops in the south of the Netherlands). Escom systems were also available by mail order from Neckermann, Wehkamp and Otto.
Eager to expand their empire into the UK market, a subsiduary was set up in 1994 by Escom AG. Through a series of purchases,  including the old Rumbelows and Silica shops, they totalled a massive 168 stores and invested £50 million in the UK market. Certainly a company that realises the importance of cooperation with other companies to get what they want!
 

Year PC-Compatibles sold
1992 180,000
1993 300,000
1994 410,000

The past three years had been profitable for Escom, establishing themselves as the second largest PC retailer. Sales had more than doubled since Escom began manufacturing under their own name in 1992. The company continued its expansion during 1995 bidding for he rights to the Commodore trademarks. The intention was to sell a range of PCs under the Commodore brand. Despite the company's history, Commodore was still a recognisable name in the industry. Other bidders at the legal proceeding objected to the sale forcing Escom to bid for the whole company, including the Amiga- an area they were obviously uninterested in. With the purchase complete, the company form two subsiduaries,  Commodore BV in Nieuw-Vennep, Holland, and Amiga Technologies located in Bensheim. Despite the obvious expense of the Commodore purchase they were confident that this money would be won back om developing these lines. In particular they mention that demonstration of new Amiga systems had raised great interest at the Berlin IF show in May '95 and the 1995 production line was already sold out. In a gesture of support for the Amiga, they state the purchase has turned Escom from a PC to a multimedia company. It soon became clear they were planning to move into the communication industry with the additional purchase of over 250 Telliance and Thorn EMI stores.

Retail Stores, as of July 31 1995

UK 167
Germany 140
Holland 36
Czech 28
Poland 17
Austria 17
France 3
Hungary 11
Slovakia 3

In a matter of months Escom release their first Commodore-branded PC based upon the Pentium processor. The Amiga, on the other hand, was not ready for shipping until Winter. Escom expressed their confidence they would be able to double the money spent upon the Commodore purchase, promoting the Commodore systems in broadsheet advertisements. At the same time their half-yearly report, (30th June 1995) noted that the PC market has shown a slowdown of sales in preparation for the release of Windows 95. This was producing a "weak consumer economy."

At first the weak economy was barely noticeable with Escom taking a large share of the total highstreet PC sales, becoming the second biggest PC distributor in the world, and making an annual turnover of £200 million. However, this was short-lived, as, in the wave of increasing competition the price of PC parts fell dramatically. In a moment that mirrored Commodores problems in the calculator market 20 years earlier, Escom found themselves selling PCs at up to £500 more than everyone else. The world and his uncle were getting into the PC market and prices were being updated almost everyday. Escom could not compete with this and gradually lost the battle for PC supremacy. Despite the drop in sales, Escom were rapidly expanding their retail chain, with a jump in employment from  1,138 to 2,891. The effect of this was soon felt as the company announced pre-tax losses of 4 million DM, a dramatic turnaround compared to the 6 million DM profits of 1994. Meanwhile events in the board room led to the departure of Manfred Schmitt, the man who started the company. The large number of former Commodore employees seemed to have tainted the PC industrys jewel as Escom followed the same path as Commodore.

In June Escom Germany filed for 'protection from its creditors'. This did not immediately affect Escom UK. Escom Germany had appointed a new director who started a shake-up. Escom UK were given a degree of autonomy, and began closing some of the less profitable shops. On the 24th of July the crunch came, Escom AG was declared bankrupt. Every store was closed and the company went up for sale. A week later the UK daughter company followed. Surprisingly no one wanted to take over the whole of Escom as a going concern, all they wanted were a few of the stores or some of the stock. Therefore, the decision was taken to close the whole operation down.

Aftermath

Despite the fall of their parent company two European subsiduaries attempted a successful management buyout (similar to the Commodore UK buyout in 1994). Escom Netherlands bought all rights to the Commodore name, becoming Commodore NL. The Amigas former parent had survived to fight another day, becoming a dealer of Commodore badged PCs. The company did not last for long, going into liquidation less than a year after the death of Escom.
Events were just as worrying regarding the sale of the Amiga. VISCorp had been in negotiation with Escom to buy Amiga Technologies and all rights to the Amiga since January 1996. The bankruptcy slowed down these negotiations, turning the event into a liquidation sale. The extended period of negotiation proved to be too much for the American company leading VISCorp to pull out of the negotiations for the Amiga purchase during October. Quikpak, an American manufacturer that had been building A4000T's for Escom stepped into the bidding, announcing plans to develop a range of Amiga 68k systems and the development of the AmigaOS for the Alpha processor. The Amiga seemed destined for an obscure future. Both companies were unable to provide the same mass market appeal the Amiga had during the Commodore era. The revelation that Gateway 2000 were interested in the Amiga sent shockwaves through the entire industry. The announcement was soon followed by confirmation of the Amigas purchase by Gateway. The Amiga had been saved but concern still existed regarding what Gateway would do with the Amiga. They were, after all, only a PC company with little appreciation about what the Amiga represented. As it turned out, the concern was unnecessary.

Background

 1986-1990 Manfred Schmitt added computers to his organ and instrument shop.
1990 He Owned 10 shops in Frankfurt. When the Berlin wall fell a joint venture with Dresden enterprises meant that Escom started manufacturing PCs. They also expanded into European market. 
1991 Started manufacture under own Escom title.
1993 Market expands with the purchase of a Dutch retail chain into UK. Escom took over Hako AG gaining access to the stock -exchange
1995- Mid 1995 167 Escom stores in the UK, 36 in Holland and 140 in Germany. Escom buy Commodore and Amiga. They claim this allows them to position theirselves favourably in the new multimedia market. Two subsiduaries are formed, Commodore BV in Nieuw-Vennep, Holland, and Amiga Technologies located in Bensheim. Escom buy RWE TELiance, September 28. Incorporate 50 stores in the Escom group for telecommunication sales.
1996 The main headquarters in Germany goes bust. UK operations closed, at least 2 European subsiduaries attempt a successful management buyout, the Commodore name is brought for badged PCs, Amiga is to be sold to Viscorp. Due to financial diffculties Viscorp drop out of the bidding by November of that year. After months of waiting the rights to the Amiga were bought by Gateway 2000.

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